What is Traded in Forex? A Complete Guide
Forex trading, also known as foreign exchange trading, involves the buying and selling of different countries’ currencies. Just as the stock market deals with buying and selling companies, forex trading focuses on investing in the fluctuations of currency prices. You can think of a currency as a reflection of a country’s economic strength.
For example, if you buy British Pounds (GBP), it means you are investing in the UK’s economy. If the UK’s economy strengthens and the Pound’s value increases, you can sell it at a higher price to make a profit.
Similarly, if you anticipate that the Pakistani Rupee (PKR) may depreciate against the US Dollar (USD), you can buy USD/PKR. If the Dollar’s value rises, you can sell it at a higher rate and earn a profit in Pakistani Rupees.
To view live currency exchange rates in Pakistan, visit our website: Live Forex Rates.
Which Currencies Are Traded the Most?
The forex market offers hundreds of currency pairs, but most trading occurs in major currencies. The world’s most traded currencies are:
- USD (United States) – Dollar – Greenback, Buck
- EUR (Eurozone) – Euro – Fiber
- JPY (Japan) – Yen – Ninja
- GBP (United Kingdom) – Pound – Sterling, Cable
- CHF (Switzerland) – Franc – Swissie
- CAD (Canada) – Dollar – Loonie
- AUD (Australia) – Dollar – Aussie
- NZD (New Zealand) – Dollar – Kiwi
Did You Know?
The Pakistani Rupee (PKR) is not classified as a major currency in the global financial market, but USD/PKR and EUR/PKR pairs are actively traded.
Additionally, Gold (XAU) and Bitcoin (BTC) are also popular investment options among forex traders.
For daily updates on currency exchange rates in Pakistan, visit our website’s Forex Market News section.
How Are Currency Prices Determined?
The value of a currency fluctuates based on the following factors:
- Interest Rates – Higher interest rates increase demand for a currency.
- Inflation & GDP Growth – A strong economy boosts a currency’s value.
- Political Stability – Currencies of politically stable countries tend to be stronger.
- Foreign Exchange Reserves – Central bank policies impact the forex market.
Factors Affecting the Pakistani Rupee (PKR):
- Intervention by the State Bank of Pakistan (SBP)
- Fluctuations in imports and exports
- Remittances from overseas Pakistanis
Click here to check the daily USD to PKR exchange rate: USD/PKR Live Rate.
How Are Currency Codes Created?
Each currency has a three-letter ISO 4217 code, standardized by the International Organization for Standardization (ISO). The first two letters represent the country, while the third letter represents the currency name. Examples:
- USD → United States (US) + Dollar (D)
- GBP → Great Britain (GB) + Pound (P)
- PKR → Pakistan (PK) + Rupee (R)
To learn more about forex trading fundamentals, visit our website’s Forex Education section.
Why Do Currencies Have Nicknames in Forex?
In forex trading, informal names are used for currencies to make communication easier for traders. Here are some common currency nicknames:
- USD (US Dollar) → Greenback, Buck, Paper
- GBP (British Pound) → Sterling, Cable
- AUD (Australian Dollar) → Aussie
- CAD (Canadian Dollar) → Loonie
- PKR (Pakistani Rupee) → Commonly referred to as “Rupee,” but has no specific nickname.
Interesting Fact:
The British Pound (GBP) is the world’s oldest currency, in use since the 8th century. The newest currency is Zimbabwe Gold (ZiG), introduced on April 8, 2024.
In Pakistan, forex traders monitor USD/PKR rates daily.
👉 For the latest forex market news in Pakistan, visit: Daily Forex News.